The Ellen MacArthur Foundation has published a white paper, in collaboration with Bocconi University and Intesa Sanpaolo, that sets out new evidence on how circular economy strategies could ‘de-risk investments’ and drive ‘superior risk-adjusted returns’ for investors and financial institutions.
Bocconi University’s analysis of 200+ European, publicly listed companies across 14 industries suggests that the higher the circularity of a company, the lower its risk of defaulting on debt, and the higher the risk-adjusted returns on its stock.
The white paper sets out how circular economy strategies might reduce investment risk by decoupling economic growth from resource consumption, diversifying business models, and allowing businesses to better anticipate stricter regulation and changing customer preferences.
Embedding circular economy principles also reduces exposure to supply chain disruptions and volatility of resource prices, the report says.
The Ellen MacArthur Foundation says the circular economy is increasingly recognised by the financial sector as a value creation opportunity that delivers on goals related to climate and other global challenges.